136 Va. 33 | Va. | 1923
delivered the opinion of the court.
In 1919, Virginia Salvage Company entered into a contract with the United • States Government for the purchase of certain ‘firewood at Camp Eustis. The Government required the company to deposit a certified check for one thousand dollars as a guaranty that it would faithfully perform the contract on its part. This check, dated December 6, 1919, signed by Virginia Salvage Company, drawn on the National Mechanics Bank of Newport News, Virginia, payable to the order of Lieutenant Colonel F. M. Hinkle, for the sum of one thousand dollars, was duly certified by the cashier of said bank on December 6, 1919, and delivered by the drawer to Col. Hinkle.
The Virginia Salvage Company having in all respects fully performed its contract, the certified check was returned unendorsed on May 22, 1920, by Col. Francis H. Lincoln, successor to Colonel F. M. Hinkle, as Army Supply Officer at Camp Eustis.
On May 22, 1920, this check was deposited by the Newport News Lumber Yards, Inc., in the Schmelz National Bank, which paid face value for it. While not endorsed by Colonel Hinkle, it was endorsed by Virginia Salvage Company and Newport News Lumber Yards, Inc. ■ The Schmelz National Bank presented said check to the National Mechanics Bank through the clearing house of the banks of Newport News, and it was returned unpaid, “For endorsement.”
The return of the check was brought to the attention of the officers of the Salvage Company, and the cheek was later returned to the Schmelz bank with the name of Colonel Hinkle thereon, but it was afterwards ascertained that this was not his signature, and when the cheek was presented the second time, payment was again refused. The Schmelz National Bank then requested the Salvage Company to do what was necessary to secure the endorsement of Colonel Hinkle.
The endorsement of Colonel Hinkle was secured in due course and with reasonable promptness and the check again presented to the National Mechanics Bank for payment and payment was again refused, the only reason assigned being, “Endorsement not authorized.” Prior to the trial of the case the only reason given by the National Mechanics Bank for the non-payment of the cheek was that the proper endorsement of Colonel Hinkle had not been secured. The Schmelz National Bank had no notice of the alleged indebtedness of the Virginia Salvage Company to the National Mechanics Bank until the trial of this case. This action was brought by the Schmelz National Bank upon the certified check aforesaid. The defendant, National Mechanics Bank, pleaded the general issue and filed its six several special pleas in writing, the substance of its defense being that the Virginia Salvage Company, the drawer of the check, was indebted to it in a sum largely in excess of the one thousand dollars, which should be allowed it as an offset against the plaintiff’s claim. Upon the issues, a jury heard the evidence and returned a verdict in favor of the plaintiff in the sum of $1,000.00.
The plaintiff moves to dismiss this writ of error for the reason that the petition does not comply with section 6346 of the Code.
We consider it unnecessary to point out the defective assignments of error in detail, since in our view we can properly dispose of the case under the assignment which challenges the action of the court in refusing to set aside the verdict of the jury as contrary to the law and the evidence.
Since the Schmelz Bank had no notice of any infirmity in the check, or any equities or set-offs between the parties, at the time Colonel Hinkle actually endorsed it, the contention that said bank was not a holder in due course on and after that date is without merit. There is nothing in section 5611, supra, or in the case of Goshen National Bank v. Bingham, 118 N. Y. 349, 23 N. E. 180, 7 L. R. A. 595, 16 Am. St. Rep. 765, so strongly relied on by the Mechanics Bank, in conflict with these views. The New York court simply holds that the subsequent endorsement, made after notice to the holder of the defenses which the bank would have had against the payee, does not relate back to the original delivery of the paper, so as to destroy the intervening rights and remedies of a third party.
Besides, Colonel Hinkle having subsequently endorsed the cheek, it is manifest that the placing of his
Section 6615, Code of 1919, reads as follows: “Where an instrument payable on demand, other than bank notes and certificates of deposit, is negotiated an unreasonable length of time after its issue, the holder is not deemed a holder'in due course.”
A certified check stands on a different footing from any ordinary check, as will appear from section 5749 of the Code, which reads as follows: “Where a cheek is certified by the bank on which it is drawn, the certificate is equivalent to an acceptance, and the check •shall be charged to the drawer’s account.
Section 5751 of the Code is in these words: “A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies the check.
The bank cannot complain of any delay within the statute of limitations, as it is benefited by such delay.
The law applicable to certified checks, as laid down by the author, may be found in 2 Daniel an Negotiable Instruments, sees. 1603, 1605, 1607-a, as follows:
Sec. 1603. “Let us consider more at length the effect of the certification of cheeks. In the first place, the bank becomes at once the principal debtor. When the holder presents the check to the bank, the latter can only respond to the demand for payment by making payment. But if it be agreed to between them, the check is certified to be ‘good;’ and, thus, in contemplation and by operation of law, it is the same as if the funds had been actually paid out by the bank to the holder, by him redeposited to his own credit, and a certificate of deposit issued to him therefor. In other words, a certified check is a shorthand certificate of deposit in favor of the holder, and payable to him, or to him or order, or to bearer, according to its terms.
“Thus the bank ceases to be the debtor of the original depositor, and becomes the debtor of the holder of the check, who may demand the amount, and sue the bank for its recovery at any time even after the lapse of many years. It will be too late after the bank has certified the check for the drawer to revoke it, and the bank will be bound to pay it though notified by the drawer not to do so. It will also be too late for the bank to say that the check was forged, and was not in fact the drawer’s, unless it be still in the hands of one who was guilty of the forgery, or had knowledge of or complicity in it, for it has conceded its genuineness, and indeed asserted it by certification. Nor can it say that there were in fact
See. 1605: “In the third place, the check when certified circulates as the representative of so much cash in bank, payable whenever demanded to. the holder. It is then like cash, but still it is not the same as cash, for *nullum, simile est idem.’ Frequently a depositor procures his own check to be certified before he offers it in payment. In such cases it does not lose its character as a check in any particular—it only has the additional credit imparted to it by the certificate.”
Sec. 1607-a. “Sometimes a check payable to order is certified without the indorsement of the payee being upon it, and when it is already in the hands óf a third darty. In such cases it is understood that the proper indorsement will be obtained before the amount is withdrawn, and that the amount will be held by the bank to meet it. But if in fact the holder be the assignee by delivery of the check for a valid consideration and entitled to receive the money, although not an indorser, the bank, it has been held, would be protected in paying him, where the check was drawn for accommodation.”
In Merchants Bank v. State Bank, 10 Wall. 648, 19 L. Ed. 1008, Justice Swayne, discussing the certification of checks, and speaking for the court, says: “It is an undertaking that the check is good then, and shall continue good, and this agreement is as binding on the bank as its notes of circulation, a certificate of deposit payable to the order of the depositor, or any obligation it can assume. The object of certifying a cheek, as regards both parties, is to enable the holder to use it as money.”
To sustain the contention of the plaintiff in error that the drawer of a certified check can, by getting in debt to the bank, defeat the right of the bona fide holder for value to recover against the bank the amount for which the check is drawn would be to administer a severe blow to the commerce and business of the country. Under such a ruling, the business world would be “deprived of the opportunity of passing large sums of money from hand to hand without risk or delay.”
The judgment complained of is plainly right and must be affirmed.
A firmed.